Chapter 9: Nexus Between Environmental, Social and Governance (ESG) Disclosure and Firms’ Performance

Organisations looking to maximise profits, effectively manage costs and create long-term value for their stakeholders have always faced difficulties from fluctuating market conditions, intensifying competition and changing consumer preferences. Balancing the demands of sustainable business practices with the need to generate profits has always presented a complex challenge for organisations, and while there is an increase in the level of awareness of environmental, social and governance (ESG), there is also an understanding that accounting measures of financial performance differ from the shareholder’s measures. This chapter adopts theoretical lenses rooted in ecological modernisation theory (EMT) to provide insightful debate on the nexus between ESG disclosure and firms’ performance. The chapter incorporates implications for decision-makers, regulators and policymakers who can use recommendations from this chapter to advocate for a robust corporate ESG disclosure to boost their market value and corporate sustainable performance.